British Columbia Nixes Fixed-Term Leases: 3 Ways to Cope

by Chris on January 2, 2018

One-year leases have long been the standard for residential rental properties. If the tenant is good, they are invited to stay another year. And if the tenant is bad, the landlord always has the option of running the clock — waiting it out — rather than spending time and money on an eviction.

British Columbia recently eliminated vacancy clauses in most tenancy agreements, which means that ousting a tenant at the end of a year is no longer an option.

Despite the disadvantages of this latest rental restriction, there may be a silver lining: landlords will need to break some bad habits, and adopt healthier ones.

Here are 3 ways to cope:

1. Screen all tenants as though they will never leave. Landlords who run fixed-term rentals can be lulled into a false sense of confidence. After all, how much damage could a tenant do in a month, or in a year? The belief that a bad tenant can be evicted without income loss is a trap. Every rental applicant — whether for one night, one month, or one year — should be treated like someone who will be caring for the property for a very long time.

With that in mind, running a tenant credit report to uncover chronic late payments or fraud seems a lot less onerous. So does spending a few minutes speaking with the applicant’s previous landlords.

2. Don’t delay maintenance and repairs. It’s easy to defer any needed work on the property until the vacancy at the end of a fixed-term lease. However, that practice is one of the reasons that long-term tenants tend to cause the most damage. Routine maintenance or repairs on the unit can’t wait until the end of the year. Come up with a plan for routine maintenance, and share that with the tenant. Create a system for reporting and completing repairs. Waiting until the tenant moves on is no longer an option.

3. Managing a rental property is a job, and landlords can’t telecommute. With no term on the tenancy, landlords must accept the fact that a tenancy is not temporary — a landlord is in it for the long haul. One year seems easy enough — just sit back and collect rent. But ten years? That’s another matter.

There is no avoiding the reality that tenants need supervision, no matter how long they stay. This new rule will test a landlord’s level of commitment. That may require an attitude adjustment, but the advantage is avoiding catastrophic property damage from unsupervised tenants.

Landlords who will be far away, have no experience, or are not interested in coming up to speed on their rights and responsibilities always have the option of bringing in an expert. Property managers can find the right tenants and watch over the property, turning potential catastrophe into cash flow. Everyone else will need to roll up their sleeves, and get to work.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

{ 1 comment… read it below or add one }

Andrew January 3, 2018 at 8:03 am

We have had “perpetual leases” in ontario for as long as I can remember (30 plus years).

In my experience, such a lease is not beneficial for landlords.

In fact its a huge difficulty for them. Most American residential landlords (if not all), do NOT have to automatically renew a lease at the end of its term. This is very helpful as it allows a landlord to be free of difficult tenants who break rental laws, make chronic unreasonable complaints, interfere with the rights of other tenants ect. It helps keep parties fair and balanced.

In theory these issues can be addressed at the rental tribunal, but the reality seems to be the cards are intentionally stacked against the landlord and this process simply doesnt work, or is very slow, expensive, uncertain and stressful.

Policy makers may see that with the introduction of this perpetual lease, fewer people will want to become landlords, resulting in less rentals and rising rental rates.

Rental availability is even more likely to be reduced as the perpertual lease, combined with rent control means that the costs of operating a rental property simply cant keep up with the real costs of operating that property.

Ironically many of these rising costs are created by the very body that enforces rent control: property taxes, water and garbage removal, inspection fees, landlord licensing fees, ect.

This means that apts with long term tenants will pay FAR below market rates, the money to repair the apts wont be generated and investors will have little incentive to invest in perpetual lease, rent controlled property. (residential)

Further, long term tenants will not move as their new rent will likely be set at market value. This means that new tenants rentering the rental market will not be able to find reasonably price apts. Toronto is experiencing this issue currently.

Sadly the perpetual lease my hurt the very party it was intended to help.

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